Northampton Mayor Clare Higgins has been a strong advocate for the controversial expansion of the city's regional landfill on Glendale Road—or, at least, an advocate for preserving the option. Over the past 10 years, her administration has carefully navigated shifting environmental regulations, complex permitting requirements, economic challenges, and relentless citizen opposition, all in the name of steering the proposed Phase 5/5B expansion home.
"It's not about the money," Higgins has said. "We are providing a regional public service… Western Massachusetts should deal with Western Massachusetts trash. And even leaving the region out of the equation, Northampton has to send its trash somewhere. What are the options? Will we feel good about ourselves if we ship our trash out of state to a poorer community?"
Granted, the presence of a publicly-owned landfill may provide an element of fiscal stability for towns, businesses, institutions, and households in western Massachusetts. And perhaps a moral argument can be made for keeping our trash local. But does this explain the city's apparent zeal for the expansion? What's in it for Northampton—what's the bottom line?
A cursory glance reveals that the Department of Public Works (DPW) runs the landfill as a business, and revenues from this business benefit the city's budget. The DPW accounts for the landfill within the mechanism of a state-approved "Solid Waste Enterprise Fund." Every year, the enterprise fund makes two primary transfers to the city's general budget: a "host community fee," and a set of payments for "indirect costs." In FY 2007, these transfers ($468,000 and $313,800 respectively) exceeded $780,000. Municipal buildings and schools get free trash disposal, and tonnage shipped from the city's transfer station does not get charged.
According to DPW Director Ned Huntley, the landfill subsidizes transfer station operations, keeping disposal costs low for residents of Northampton. "In Northampton, residents pay a $25 yearly sticker fee, then a dollar a bag at the transfer station," he explained. "The true costs of disposal are closer to three dollars a bag. Some towns, such as the town of Uxbridge, have chosen to stop providing waste management as a municipal function, which forces homeowners to contract with private haulers. This can cost a household as much as $600 a year."
There seems to be a broad economic constituency for the landfill and the cash that it generates—all city departments, city schools, and residents receive some direct benefit.
The mayor has insisted that this revenue stream and set of subsidies does not, in itself, constitute an argument for the landfill expansion. "If any of the health or environmental studies return showing a problem, we'll close the landfill," she has said. "The $800,000 or so that we get from the host community fee and from other transfers needs to be placed within the context of a $72 million dollar budget. We've absorbed losses far worse than that in the past."
City Finance Director Chris Pile was a bit less sanguine about the prospect of the budget taking a hit of this magnitude. "The city is currently operating under a $1.2 million dollar structural deficit. If Question One, the ballot initiative to repeal the state income tax, passes, then we're in even more trouble. By the way, we would save some money on payroll and benefits if we closed the facility, leaving the impact at maybe six, seven hundred thousand. But that's not insignificant. Could we absorb the loss if we had to? We'd find a way. And we may have to, depending on how things go. But it would not be fun."
The Money Dance
For decades, Northampton officials have been stepping, with variations, to the landfill money dance. The dance is performed to a complex rhythm involving bonded debt, projected revenue, operating expenses, available capacity, a dynamic market in tipping fees, economies of scale, government earmarks, monitoring and regulation, subcontractors, and private haulers. Simply put, the landfill needs to attract about 50,000 tons annually at a per-ton rate of $60 to $70 to meet its budget. The market for trash is competitive. At least once, the city has had to slash its tipping fees in order to retain private haulers, who contribute 80 percent of the Northampton landfill's waste stream.
Back in 1997, a seeming "trash crisis" was imminent. The state Department of Environmental Protection (DEP) had issued a landfill moratorium, and was poised to force the closure of the Northampton facility by 2002. In response, Mayor Mary Ford formed a blue-ribbon study group. The Long Range Solid Waste and Sludge Planning Committee, chaired by economic development planner M. J. Adams (who currently directs Pioneer Valley Habitat for Humanity), was charged with examining the financial impact of the landfill closure, evaluating a range of options, and making recommendations to the City Council.
The committee, in its 1999 final report, did not mince words. "The City of Northampton cannot afford, at this time, to be out of the landfill business," it stated. "If it were, it would result in an estimated net annual impact of over $1 million a year to the city budget from debt payments, operating expenses, alternative disposal costs, and lost revenues." The report revealed that the city had incurred significant debt as a result of operating the landfill—$4,877,500 as of January 1, 1999—and that the debt had four sources: capping and closing the unlined portion of the landfill in 1995, the purchase of 50 acres for the anticipated expansion in 1988, the construction of a gas management system, and the construction of a new lined cell in 1990. It warned that the city is "operating a ten-year landfill on a twenty-year debt cycle" and that "the landfill debt is a significant pressure on the city budget that must be immediately addressed."
The long-range committee came up with a medium-range plan, designed to dig the city out of its hole. First, the "solid waste planning horizon" needed to be extended for a few years. In order to get around the DEP moratorium, the city had to find a way to expand the landfill without expanding its footprint. This could be accomplished by "filling in the valley" between two existing cells. This option would extend the landfill's life until at least 2007. (The valley-fill cell is still active today.)
The committee calculated that in 2007 there would still be an outstanding debt principal of $2.4 million. Northampton must "aggressively pay down the landfill debt" using the existing revenue stream because "nobody knows if the city will be allowed to operate a landfill after the year 2007." (The Solid Waste Enterprise Fund, as an accounting mechanism, was instituted in response to this committee's report.)
Saved by the Bell
The landfill cell that was supposed to have been closed in 2007 is still active, and is expected to be with us, generating revenue, until the end of 2011. As of February, 2008 landfill debt still equaled $1.815 million, scheduled to be paid off in 2017, amounting to an average debt service of more than $200,000 per year. If the landfill had closed in 2007, the city would have been left holding the bag—stuck with old landfill debt, offset by no dedicated revenue stream, to be paid from the city's general fund over the next nine years.
The Advocate met with Mayor Higgins and asked if Northampton is still painted into a corner—if the expansion is necessary in order to pay off old debt. Is the city still in a position in which it "cannot afford to be out of the landfill business?"
"The landfill is not going to close tomorrow," Higgins said in a recent interview with the Advocate. "Because of changes in the way that it is managed, including better compaction and a different approach to alternative daily cover, we've been able to extend the life of the current facility till 2011. We need to be prepared for the possibility that we will not go with the expansion. So I asked Ned Huntley to come up with a financial plan that addresses that contingency, which he presented to the City Council earlier this year. He has been budgeting for closure and post-closure costs all along. The fund can meet all of these costs by 2011, which includes accounting for the old debt that you refer to while still preserving the host community fee and indirect costs transfer to the general budget."
Huntley showed the Advocate his plan, known as the "Landfill Closure/Post Closure Fund Projection," which states that post closure costs include 30 years of environmental monitoring, engineering, maintenance, and electricity, totaling $1.2 million (in 2008 dollars). Future capping costs for the current active lined cells are estimated at $3.25 million. Both figures assume a rate of return on the closure fund that exceeds the rate of inflation. Outstanding contracts added another $800,000 or so. There also in Huntley's plan was the old landfill debt of $1.815 million. Grand total required? A little more than $7 million dollars. Current balance in the closure fund? About $3.5 million. Needed? Another $3.5 million.
Huntley multiplied the budgeted yearly escrow into the closure fund—$630,496—by three and a half years, and was able to knock another $2.2 million from the total. The remaining one and a quarter million was amortized over 54 monthly payments of $279,900 from July, 2007 to December of 2011. Over the next three and a half years, Huntley expects to transfer almost $1 million from future O & M (Operating and Management) budgets into the closure fund. A payment of almost $280,000 from the FY 2008 "undesignated fund balance" (basically, the place where landfill "profits" go) made up the difference. Indeed, it looked as if the city had a plan to account for $ 7 million worth of landfill closure costs by the end of calendar year 2011. (City Finance Director Christopher Pile validated these figures, and expressed confidence to this reporter that all outstanding debt related to the existing landfill would be retired under this plan.)
A number of assumptions in this calculation could reasonably be challenged—unknowns such as future interest rates and inflation, utility costs, potential litigation, unforeseen mitigation costs, available capacity, the post-closure regulatory landscape, and the trash market itself. But let's say, for the sake of argument, that Huntley's projections are spot-on. If Northampton can close its landfill in three and half years and walk away free and clear, then why not just do it? Is it in Northampton's best interest to stay in the landfill business?
The Landfill Biz
When the landfill was last expanded, in 1989, the state picked up the tab for the full $6.9 million capital expenditure. Times have changed. This time around, the city must issue a series of municipal bonds to pay for the construction. Given the DPW's ballpark per-acre costs of $400,000 to $450,000, construction might cost $12 to $13.5 million.
As of this date, the city of Northampton has not developed a business model for building and running an expanded landfill. "We are still waiting for the Stantec Options Study," explained Pile. "One option involves going ahead with the expansion, and there will be a business model associated with that. Other options for managing our city's solid waste will generate completely different business models."
Neither Huntley, Higgins, nor Pile were willing to confirm that an expanded landfill would necessarily generate enough revenue to bring the city a yearly host community fee.
The trash disposal business is notoriously competitive. Landfills compete with recycling, with incineration, and with each other. Source reduction, which may meet a valid societal objective, is structurally at odds with the profit-driven, pro-trash landfill model.
In a typical operation, the costs of land, permitting, design, construction, monitoring, closure, post-closure oversight, financial assurance, and operations are divided by total yards to return a per-unit cost of disposal. Add profit to this, convert volume to weight, and you've got your tipping fee, which is the cost per ton charged to haulers. If the tipping fee is too high, haulers will take their business elsewhere. If it is too low, the landfill either jockeys for a greater volume of trash, which shortens the life of the facility, or operates at a loss.
In the landfill business, trash is good. Currently Northampton's Solid Waste Enterprise Fund relies on 45,000 to 50,000 tons per year in order to meet budget. If Pioneer Valley residents significantly reduce what they throw away, the city may move to expand the landfill's "wasteshed"—that is, to entice tonnage from other areas. If another regional facility offers haulers a cheaper alternative, this strategy may fail. Duseau Trucking has a permit to operate a transfer station in North Hatfield, with rail access. If, for instance, Duseau were able to ship our region's trash to another facility at a lower cost, it is possible that the Northampton municipal landfill would end up cash-starved.
City Engineer James Laurila seemed unmoved when asked if he believed that source reduction, competition, or lack of state support might pose economic risks to Northampton's planned waste enterprise. "Private companies are continuing to build landfills, simply because they are profitable," he pointed out. "The fact that the state will not capitalize construction this time really isn't relevant. Landfill space is valuable and will continue to be so. Massachusetts generates four to five million tons of solid waste a year. We're a long way from having a shortage, even with improved recycling and source reduction."
Where To, Northampton?
"Zero Waste!" I was engaged in discussion with one of Northampton's more idealistic citizens about how the region should address its garbage problem. "If Northampton builds this landfill, there will be no incentive to change our ways. As it is, it's pathetic. There's no free store at the transfer station. You go to the city website and you can't even find out when the next household toxics collection day is. There's no recycling at the apartment complexes. There's no composting program for restaurant food waste. Those plastic bottle bins that are downtown now? Nice, but why did it take so long? Nothing's going to happen without political leadership. And I can guarantee that nothing is going to happen if we build that landfill."
Can the region realistically achieve zero waste by the end of 2011, even with the best of intentions? While city officials might be reasonably criticized for failure to take courageous and imaginative stands, they are not in an easy position, and must operate within the world as we know it.
The city is poised to make a momentous decision. The timeline looks something like this: Stantec consultants will return the options study, and there will be some level of public discussion. The Board of Public Works will decide whether to ask the City Council to approve the landfill special permit, and the Council will vote sometime next spring. The state DEP will be called upon to issue an authorization to construct (ATC) and an authorization to operate (ATO). Northampton must also demonstrate to the DEP that it has met all the conditions of the so-called site selection waiver, which gave the city permission to build the landfill over an aquifer recharge area.
It is difficult for citizens to know how they can best contribute their ideas. City councilors, under advisement from legal counsel that their "quasi-judicial" status as special permit deliberators must be preserved, are reluctant to discuss the landfill expansion with their constituents. With no dedicated long-range solid-waste planning committee in place, Higgins has made it clear that the Board of Public Works , which she appoints, is responsible for this function. The discussion is intensely polarized at this point, bouncing between an enraged opposition group and a defensive administration. While many arguments have been made against the landfill expansion, no reasonable, economically feasible alternative has yet been advanced. Yet some wonder: even if an alternative were advanced by concerned citizens, would it be taken seriously?
George Crombie, Vermont Secretary of Natural Resources, spoke in 2007 at the Vermont College Chapel in Montpelier: "We should be careful how much new landfill space we build. & Landfills are expensive to build, with high fixed costs. & If they are not constructed at the appropriate scale, the disposal costs per ton will go up with every ton that is eliminated, thus creating a disincentive to reduce waste. Before building new landfills, we need to make sure that the economic model is pro-recycling and not pro-disposal."
I am reminded of the words of attorney Thomas Mackie, the city of Northampton's lawyer of choice in all things related to the landfill. "Caveat Emptor," he intoned to the Zoning Board of Appeals, in dismissing the concerns of citizens who had knowingly bought houses within the impact zone of the Glendale Road regional landfill.
City taxpayers deserve the opportunity to "look under the hood" of the landfill expansion plan. It's probably not the only car on the lot. What we buy over the next six or eight months will be with us for a good long time. Caveat Emptor, indeed.
